EUROPEAN EQUITIES UPDATE: European stocks seemingly shrug off Trump's latest tariffs on pharma/trucks

STOXX 600: +0.4%

• European bourses are modestly firmer across the board and have traded with a slight upward bias throughout the morning. All focus on US President Trump announcing 100% tariffs on Pharmaceuticals, 50% tariffs on Kitchen Cabinets, and a 25% tariff on all “Heavy Trucks” made in other parts of the world.


• The region has seemingly shrugged off the latest barrage of tariff levies announced by Trump, but with some analysts suggesting that the pharma-specific ones are not as bad as feared (details in the sectors section below).


• The European docket today has been fairly thin, aside from the ECB Survey of Consumer Expectations, where both the 1- and 5-year inflation forecasts rose. Ahead, aside from ECB’s Lagarde, the calendar for the remainder of the day is light.

Sectors: Positive

• European sectors hold a strong positive bias, with only a couple of sectors marginally lower.


• Insurance is found right at the top of the pile, followed closely by Travel & Leisure and then Energy. To the bottom, Tech, Basic Resources, and Healthcare.


• Most of the focus this morning has been on the latest Trump tariffs, where he announced 100% tariffs on Pharma, 50% on kitchen cabinets, and 25% on heavy trucks.”; for the latter, Daimler Truck (-2.5%) moves lower, whilst Volvo (+3%) remains in the green. Bernstein writes that Daimler Truck could be most affected by these tariffs, given its high exposure to the US; analysts add that Paccar stands to benefit the most.


• Delving into the pharma tariffs, some analysts have suggested the announcement may actually provide some relief for traders; focus is on the caveat that a Co. will not be subject to the tariff rate if they are building a pharma plant in the US. So whilst the sector was initially underperforming, some heavyweights have managed to climb out of negative territory – namely those which have already announced plans for plants in the US; Roche (+0.2%), AstraZeneca (U/C). Jefferies writes that “overall, we think this is a win for Pharma and shouldn't have a material impact”. In US pre-market trade, the likes of Eli Lilly (+1.7%) and Viking (+1.4%) both move higher.


• Sticking with trade, but this time on the EU side of things; the bloc is reportedly planning to impose tariffs of 25-50% on Chinese steel and related products, via Handelsblatt. As such, steel names across the board have been boosted; ThyssenKrupp (+3.2%).


• Finally, the Tech sector has been dragged lower today by broad weakness in semiconductor names. The WSJ reported that the US Administration is planning a way to "dramatically" reduce the US's reliance on semiconductors made overseas. ASML (-0.8%), BE Semi (-1.8%) both move lower. It is worth highlighting that ASML has a monopoly on EUV lithography machines, so it may prove to be fairly resilient should the policy go ahead.

Movers:

• SAP -0.8%; awarded a USD 1bln firm-fixed-price contract by the US Army.


• Volkswagen -0.5%; Co. cuts output and pauses production at German EV plants, Bloomberg reports.


• Alstom +3%; Signs a rolling stock contract in Europe for around EUR 475mln, to be booked quarterly FY 25/26.

US Equity Futures: ES +0.1%, NQ +0.1%, RTY U/C

• Futures are modestly firmer/flat, attempting to follow some of the positive risk tone seen in European trade, but with trade ultimately tentative into US PCE.


• On that, headline PCE is expected to rise +0.3% M/M in August (prev. +0.2%), and the annual rate is seen rising to 2.7% Y/Y (prev. 2.6%). The core measure is expected to rise +0.2% M/M (prev. 0.3%), and the annual rate of core PCE is seen unchanged at 2.9% Y/Y. After the PPI and CPI report for August, analysts were predicting Core PCE could see a rise between 0.28 and 0.35% M/M (vs 0.27% in July), according to the WSJ's Fed watcher Nick Timiraos. Elsewhere, Fed’s Barin and Bowman are also due.

26 Sep 2025 - 10:05- ForexUS Research- Source: Newswires